L.A., Houston Companies to Advise CalPERS

California Public Employees’ Retirement System has opted to award its Southwestern U.S. office real estate advisory contract to Los Angeles-based CommonWealth Pacific. Houston-based Hines Interests will handle related responsibilities in the East and Northwest.

The assignments to the two firms--which will replace several existing CalPERS office investment managers--are the latest consolidation moves in the state retirement system’s ongoing review and regional consolidation of its real estate investment advisory relationships.

CommonWealth Pacific is affiliated with CommonWealth Partners, a diverse real estate firm formed about two years ago by several former senior officers of Maguire Thomas Partners, a Los Angeles developer. CommonWealth will oversee a CalPERS portfolio of 10 properties valued at about $350 million, including the landmark twin-tower Trillium complex in Warner Center. Hines, a much larger and older company that has been active in California for many years, is assuming responsibility for 16 office properties valued at more than $950 million.

The two companies will assist in the design and structure of CalPERS’ office investment strategies and implement those strategies through acquisitions, asset management, development and dispositions. Annual fees are based on the value of “assets under management” by each advisory firm. Management contracts remain contingent on final contract negotiations.

CommonWealth has also agreed to invest $2 million, and Hines $50 million, in existing CalPERS regional portfolios and future acquisitions through the pension fund’s new co-investment program. CalPERS has $135 billion in assets.